PDF Volume 11a, Chapter 2: "Project Orders" Summary of Major Changes

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Financial Management Regulation

Volume 11A, Chapter 2 * January 2018

VOLUME 11A, CHAPTER 2: "PROJECT ORDERS"

SUMMARY OF MAJOR CHANGES All changes are denoted by blue font.

Substantive revisions are denoted by an * symbol preceding the section, paragraph, table, or figure that includes the revision.

Unless otherwise noted, chapters referenced are contained in this volume.

Hyperlinks are denoted by bold, italic, blue and underlined font.

The previous version dated August 2017 is archived.

PARAGRAPH

EXPLANATION OF CHANGE/REVISION

020301.C. Date change made to extend G-Invoicing implementation

period to accommodate software updates.

PURPOSE Revision

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Financial Management Regulation Table of Contents

Volume 11A, Chapter 2 * January 2018

VOLUME 11A, CHAPTER 2: "PROJECT ORDERS" ................................................................ 1

0201 GENERAL ..................................................................................................................... 4

020101. Purpose ................................................................................................................. 4 020102. Authoritative Guidance ........................................................................................ 4

0202 DEFINITIONS ............................................................................................................... 4

020201. 020202. 020203. 020204.

DoD-owned Establishment .................................................................................. 4 Contractual Relationship and Commercial Contracts .......................................... 4 Allotment.............................................................................................................. 5 Approved Projects ................................................................................................ 5

0203 GENERAL POLICY...................................................................................................... 5

020301 020302. 020303. 020304. 020305.

Department of the Treasury Guidance ................................................................. 5 Recordable Obligation ......................................................................................... 5 Project Order Forms ............................................................................................. 6 Work Description ................................................................................................. 6 Use of Standard Line of Accounting (SLOA)...................................................... 6

0204 ADVANCE PLANNING............................................................................................... 6

020401. Work Estimates to Performing DoD Establishments........................................... 6 020402. Cost Estimates ...................................................................................................... 7

0205 CONDITIONS GOVERNING ISSUANCE AND ACCEPTANCE OF PROJECT ORDERS ..................................................................................................................................... 7

020501. 020502. 020503. 020504. 020505. 020506. 020507. 020508. 020509. 020510. 020511. 020512. 020513. 020514. 020515. 020516.

Contractual Relationship ...................................................................................... 7 Under the Same Activity Commander ................................................................. 7 Expiration............................................................................................................. 7 DoD-Owned Establishment ................................................................................. 7 Payments .............................................................................................................. 7 Specific, Definite, and Certain ............................................................................. 8 Certification of Availability for Purpose.............................................................. 8 Bona Fide Need.................................................................................................... 8 "Entire" Versus "Severable" ................................................................................ 8 Commencement of Work ................................................................................... 10 Contingent Event Prohibition............................................................................. 10 Lawful Purpose .................................................................................................. 10 Authorized Purpose ............................................................................................ 10 Project-Order Modifications .............................................................................. 10 Ability to Perform .............................................................................................. 11 Subsidiary Ordering ........................................................................................... 11

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Financial Management Regulation Table of Contents (Continued)

Volume 11A, Chapter 2 * January 2018

020517. 020518. 020519. 020520.

Project Order Default ......................................................................................... 12 Project Order Financing ..................................................................................... 13 Direct-Cite Prohibition....................................................................................... 13 Reimbursement of Costs Incurred in Performance of a Project Order .............. 13

0206 CONDITIONS GOVERNING PERFORMANCE OF PROJECT ORDERS ............. 13

020601. 020602. 020603. 020604.

Timeliness .......................................................................................................... 13 Notification of Delivery Schedule ..................................................................... 13 Summary of Costs .............................................................................................. 13 Expiration Dates................................................................................................. 14

0207 REIMBURSEMENTS TO PERFORMING DOD-OWNED ESTABLISHMENTS .. 14

020701. 020702. 020703. 020704. 020705. 020706. 020707. 020708. 020709.

Reimbursement .................................................................................................. 14 Fixed-Price Project Orders ................................................................................. 14 Cost-Reimbursement Project Orders.................................................................. 15 Unfunded Costs .................................................................................................. 15 Working Capital Fund........................................................................................ 16 Non-Working Capital Fund................................................................................ 16 Reimbursable Costs............................................................................................ 16 Termination Costs .............................................................................................. 16 Billing................................................................................................................. 16

0208 ACCOUNTING FOR COST OF PERFORMANCE................................................... 17

020801. 020802. 020803. 020804. 020805.

Administration.................................................................................................... 17 Working Capital Fund........................................................................................ 17 Obligation Authority .......................................................................................... 17 Costs Accounts................................................................................................... 17 Billings ............................................................................................................... 17

0209 EXEMPTIONS............................................................................................................. 17

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Financial Management Regulation CHAPTER 2

Volume 11A, Chapter 2 * January 2018

PROJECT ORDERS

0201 GENERAL

020101.

Purpose

This chapter prescribes the financial management guidance and policy involving project orders issued pursuant to the authority in Title 41, United States Code (U.S.C.), section 6307. Chapter 1 provides the overall guidance and discussion of general reimbursement procedures and related supporting documentation.

020102.

Authoritative Guidance

A "project order" is a specific, definite, and certain order issued under the authority contained in 41 U.S.C. ? 6307. The United States Coast Guard (USCG) has similar project order authority contained in 14 U.S.C. ? 151 to accept orders from, and enter into reimbursable agreements with establishments, agencies, and departments of the Department of Defense (DoD). When placed with, and accepted by, a separately managed DoD-owned establishment or the USCG, the project order serves to obligate an appropriation(s) in the same manner as an order or contract with a commercial enterprise.

0202 DEFINITIONS

020201.

DoD-owned Establishment

A "DoD-owned establishment" for the purpose of this chapter is any DoD-owned and operated activity (that is, not contractor owned or operated). Such activities include working capital fund activities; other revolving fund activities; and those appropriated fund activities engaged in reimbursable operations that reasonably are not severable into fiscal year segments and where such operations can be forecasted with reasonable accuracy. Examples of such activities include: Equipment overhaul or maintenance shops, manufacturing or processing plants or shops, research-and-development laboratories, computer software design activities, testing facilities, proving grounds owned and operated by the Department, and engineering and construction activities.

020202.

Contractual Relationship and Commercial Contracts

Terms such as "contractual relationship," and "commercial contracts," are used to indicate the close relationship between project orders and commercial contracts in the particular circumstances involved. The use of these and similar terms neither must be construed as requiring project orders to be subject to the provisions of the Federal Acquisition Regulation nor as imposing upon the parties to a project order agreement, responsibilities (legal or otherwise) not provided for in this chapter.

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020203.

Financial Management Regulation Allotment

Volume 11A, Chapter 2 * January 2018

The term "allotment" includes approved operating budgets for the operation of the U.S. Armed Forces.

020204.

Approved Projects

As used in the referenced authority, the term "approved projects" simply refers to projects approved by officials having legal authority to do so.

0203 GENERAL POLICY

020301

Department of the Treasury Guidance

A. Section 4706 "Intragovernmental Requirements" of the Treasury Financial Manual (TFM) discusses the requirements necessary to properly report intragovernmental transactions resulting from business activities (i.e., buy/sell transactions) between two federal government entities, called trading partners. It further references the Intragovernmental Transaction Guide (Appendix 10 to the TFM) as containing the business rules and processes to properly record, report, and reconcile intragovernmental transactions, including the processes for dispute resolution.

B. Within these business rules in Appendix 10, Section 9 provides the standard Interagency Agreement (IAA) Form containing two sections: the General Terms and Conditions (GT&C) Section (Form 7600A) and the Order Requirements and Funding Information (Order) Section (Form 7600B). Treasury has established the use of both these forms as necessary to ensure the proper recording and reporting on intragovernmental buy/sell transactions, and to eliminate the federal-wide reporting deficiencies impacting the Financial Report of the United States Government.

C. The Treasury's G-Invoicing system (formerly named the Invoice Processing Platform) will be used to negotiate, broker, and electronically store the GT&Cs between buyers and sellers for all inter- and intra-governmental reimbursable transactions as appropriate system capabilities come online. This requirement is for IAAs established during or after Fiscal Year (FY) 2018, and whose terms extend beyond FY 2018.

020302.

Recordable Obligation

A. A project order is a valid and recordable obligation of the issuing entity when the order is placed with and accepted by a separately managed DoD-owned establishment or the USCG, providing the obligation otherwise meets the criteria for recordation of an obligation contained in 31 U.S.C. ? 1501.

B. All orders or contracts for work or material or for the manufacture of material pertaining to approved projects placed with DoD-owned establishments or the USCG must be considered as obligations in the same manner as prescribed for similar orders or contracts

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